As a company grows, so does the team of people to handle planning and strategy. Where once the CEO might have handled these tasks exclusively, a CFO will have stepped in to create financial strategies, and the company may also bring someone in to take on a CSO – Chief Strategy Officer – role. This fairly recent addition to the C-Suite has led many companies to wonder what the differences are between a CFO or a CSO on the tasks of creating business strategies.
It is important to understand what each of these positions actually does before the question of who is better at strategy can be addressed.
What A CFO Does
A Chief Financial Officer is generally in charge of the company’s entire financial picture. They track past financial information, stay on top of current finances including capital structure and investment decisions, and they also look to the financial future.
It is in this last section of the finances that the question of strategy arises. A CFO creates a company’s financial model for the future based on everything they know about past performance, what’s changing in the industry, and what financial challenges are appearing on the horizon. All of this information allows the financial officer to create a strategy for spending, growth, investment, and more that will get the company to its ultimate goals.
What a CSO Does
The job of a CSO appears to be right there in the name – they are in charge of the company’s strategic approach to the future of the business. What that means can vary from company to company, but as a general rule it is the CSO’s job to help formulate strategy and then to implement it.
What that means is that the CSO consults with the other corporate officers to determine the company’s strategies and to find the ways to make it happen. In some companies the CSO will have more of a hand in the formulation part, while in others the role is more in the execution of them. Many CSOs come from a background where they have played multiple roles in the company and have a unique view of how the pieces fit together while also having a strong sense of vision for the future.
Pros and Cons of Each
Both CFO and CSO positions bring something different to the table. Most companies are not looking to replace a CFO with a CSO, but it is worth looking at the pros and cons of each.
The pros of a CFO include expertise on a financial level that can make sure costly mistakes are avoided. The understanding of the past finances of the company that comes from a full-time CFO is an invaluable tool. Of course, a CFO is very focused on finances and may not see the wider picture that goes company-wide and beyond.
That is where the pros of a CSO come in; they have breadth of vision that includes financial matters but also looks at the widest angle and the furthest down the road. Since they frequently come from a background of many different roles in the company, they avoid the tunnel vision that can come from only wearing one hat. On the other hand, they do not always have the financial knowledge that is required to make sure a company stays in the black – and without a strong financial foundation, everything else crumbles.
Both the CFO and CSO Work Best when they Work Together in a Symbiotic Relationship
Both the CFO and the CSO should be the best at their kind of task creating a comprehensive strategic approach for the business. This should be similar to when a small to mid-sized company has a both a CFO and a business coach. A great CFO keeps accurate records and can extrapolate from them the good and bad financial choices the company has made in the past. He or she will then combine that information with a keen eye for future financial changes and needs to create a solid path to profit.
With that information, a good CSO should be able to work with the CEO and the CFO to create an overall strategy that works to meet all of the company’s goals. If everyone is doing their job, all of the C-suite officers should be creating strategy together.
Not all companies will have or even need a CSO; by contrast the CFO role is in many ways more vital. As the company moves into the future, however, and the CSO role appears to be one worth considering, it is important to approach the hiring from the vantage point of creating a team of strategists who will see every angle and create a clear picture of the future. For more information Contact Your CFO Solutions.